MAYBANK INVESTMENT BANK BERHAD (15938-H) CONDENSED ... · Appendix A 30 June 31 December 2017 2016 Group Notes RM'000 RM'000 ASSETS Cash and short-term funds 14 680,283 534,129 Deposits

Appendix A

30 June 31 December

2017 2016

Group Notes RM'000 RM'000

ASSETS

Cash and short-term funds 14 680,283 534,129

Deposits and placements with financial institutions 15 553,340 388,587

Financial investments portfolio 16 565,095 508,408

Loans and advances 17 308,267 299,876

Derivative assets 20 (i) 13,093 19,839

Other assets 18 628,440 755,875

Tax recoverable 4,434 2,017

Statutory deposits with Bank Negara Malaysia 105 105

Investment in a joint venture 13,744 15,779

Property, plant and equipment 16,892 19,148

Intangible assets 15,470 16,687

Deferred tax assets 5,519 14,465

TOTAL ASSETS 2,804,682 2,574,915

LIABILITIES

Deposits and placements from a licensed bank 652,818 615,483

Derivative liabilities 20 (ii) 107,806 31,109

Other liabilities 19 1,457,920 1,384,022

Provision for taxation and zakat 836 312

TOTAL LIABILITIES 2,219,380 2,030,926

SHAREHOLDER'S EQUITY

Share capital 222,785 50,116

Reserves 362,517 493,873

TOTAL EQUITY 585,302 543,989

TOTAL LIABILITIES AND

SHAREHOLDER'S EQUITY 2,804,682 2,574,915

COMMITMENTS AND CONTINGENCIES 27 1,611,552 1,620,064

(These unaudited condensed financial statements should be read in conjunction with the audited financial statements for the

financial year ended 31 December 2016 and the accompanying explanatory notes attached to the interim financial statements)

UNAUDITED STATEMENTS OF FINANCIAL POSITION AS AT 30 JUNE 2017

CONDENSED FINANCIAL STATEMENTS

MAYBANK INVESTMENT BANK BERHAD

(15938-H)

(Incorporated in Malaysia)

1

30 June 31 December

2017 2016

Bank Notes RM'000 RM'000

ASSETS

Cash and short-term funds 14 639,849 494,150

Deposits and placements with financial institutions 15 553,320 388,567

Financial investments portfolio 16 565,095 508,408

Loans and advances 17 308,267 299,876

Derivative assets 20 (i) 13,093 19,839

Other assets 18 626,993 753,939

Tax recoverable 2,430 34

Statutory deposits with Bank Negara Malaysia 105 105

Investment in subsidiaries 203,259 203,259

Investment in a joint venture 13,996 13,996

Property, plant and equipment 16,877 19,133

Intangible assets 15,470 16,687

Deferred tax assets 5,519 14,465

TOTAL ASSETS 2,964,273 2,732,458

LIABILITIES

Deposits and placements from a licensed bank 652,818 615,483

Derivative liabilities 20 (ii) 107,806 31,109

Other liabilities 19 1,626,967 1,553,409

Provision for taxation and zakat 836 312

TOTAL LIABILITIES 2,388,427 2,200,313

SHAREHOLDER'S EQUITY

Share capital 222,785 50,116

Reserves 353,061 482,029

TOTAL EQUITY 575,846 532,145

TOTAL LIABILITIES AND

SHAREHOLDER'S EQUITY 2,964,273 2,732,458

COMMITMENTS AND CONTINGENCIES 27 1,611,552 1,620,064




UNAUDITED STATEMENTS OF FINANCIAL POSITION AS AT 30 JUNE 2017


(15938-H)


2

30 June 30 June 30 June 30 June

2017 2016 2017 2016

Group Notes RM'000 RM'000 RM'000 RM'000

Interest income 21 11,778 8,996 22,300 17,532

Interest expense 22 (7,502) (4,537) (14,263) (8,906)

Net interest income 4,276 4,459 8,037 8,626

Net income from Islamic

Banking Scheme operations 29 4,790 8,158 48,247 11,770

Non-interest income 23 76,677 73,244 143,113 201,365

Net income 85,743 85,861 199,397 221,761

Overhead expenses 24 (70,182) (69,724) (138,580) (135,731)

Operating profit 15,561 16,137 60,817 86,030

Writeback of/(allowance for) impairment on

loans and advances and other debtors, net 25 460 466 (969) 9

(Allowance for)/writeback of impairment on

derivative assets - (13) - 789

16,021 16,590 59,848 86,828

Share of results of a joint venture (1,228) 13 (1,351) (124)

Profit before taxation and zakat 14,793 16,603 58,497 86,704

Taxation and zakat (4,069) (5,210) (16,183) (22,859)

Profit for the period, attributable to equity

holder of the Bank 10,724 11,393 42,314 63,845

Basic and diluted earnings per share (sen),

attributable to equity holder of the Bank 21 23 84 127

Other comprehensive (loss)/income that may be

reclassified to profit or loss in subsequent

periods:

Foreign currency translation (648) 462 (1,001) (1,321)

Total other comprehensive (loss)/income

for the period, net of tax (648) 462 (1,001) (1,321)

Total comprehensive income for the period,

attributable to equity holder of the Bank 10,076 11,855 41,313 62,524

UNAUDITED STATEMENTS OF COMPREHENSIVE INCOME


(15938-H)



FOR THE SECOND QUARTER ENDED 30 JUNE 2017

Quarter Ended Cumulative 6 Months Ended



3


2017 2016 2017 2016

Bank Notes RM'000 RM'000 RM'000 RM'000

Interest income 21 11,518 8,732 21,789 16,979

Interest expense 22 (7,502) (4,537) (14,263) (8,906)

Net interest income 4,016 4,195 7,526 8,073

Net income from Islamic

Banking Scheme operations 29 4,790 8,158 48,247 11,770

Non-interest income 23 75,954 71,541 142,068 199,116

Net income 84,760 83,894 197,841 218,959

Overhead expenses 24 (69,420) (68,003) (137,084) (133,166)

Operating profit 15,340 15,891 60,757 85,793

Writeback of/(allowance for) impairment on

loans and advances and other debtors, net 25 460 541 (969) 234

(Allowance for)/writeback of impairment on

derivative assets - (13) - 789


Taxation and zakat (4,021) (4,921) (16,089) (22,519)

Profit for the period, representing

total comprehensive income for the period,

attributable to equity holder of the Bank 11,779 11,498 43,699 64,297





UNAUDITED STATEMENTS OF COMPREHENSIVE INCOME


(15938-H)



4

Distributable

Exchange

Share Share Statutory Regulatory fluctuation Retained

capital premium reserve reserve reserve earnings Total

Group RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

At 1 January 2017 50,116 172,669 50,116 3,497 1,757 265,834 543,989

Profit for the period - - - - - 42,314 42,314

Other comprehensive income - - - - (1,001) - (1,001)

Total comprehensive income for the period - - - - (1,001) 42,314 41,313

Transfer to regulatory reserve - - - 90 - (90) -

Transfer to retained earnings - - (50,116) - - 50,116 -

Transfer to share capital 172,669 (172,669) - - - - -

At 30 June 2017 222,785 - - 3,587 756 358,174 585,302

At 1 January 2016 50,116 172,669 50,116 3,409 1,121 294,595 572,026

Profit for the period - - - - - 63,845 63,845

Other comprehensive income - - - - (1,321) - (1,321)

Total comprehensive income for the period - - - - (1,321) 63,845 62,524

Transfer from regulatory reserve - - - 95 - (95) -

Dividends (Note 10) - - - - - (35,708) (35,708)

At 30 June 2016 50,116 172,669 50,116 3,504 (200) 322,637 598,842

(These unaudited condensed financial statements should be read in conjunction with the audited financial statements for the financial year ended 31 December 2016 and the

accompanying explanatory notes to the interim financial statements)

<---------------------Non-distributable----------------------->



(15938-H)



UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

5

Distributable

Share Share Statutory Regulatory Retained

capital premium reserve reserve earnings Total

Bank RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

At 1 January 2017 50,116 172,669 50,116 3,497 255,749 532,147

Profit for the period - - - - 43,699 43,699

Total comprehensive income for the period - - - - 43,699 43,699

Transfer to regulatory reserve - - - 90 (90) -

Transfer to retained earnings - - (50,116) - 50,116 -

Transfer to share capital 172,669 (172,669) - - - -

At 30 June 2017 222,785 - - 3,587 349,474 575,846

At 1 January 2016 50,116 172,669 50,116 3,409 284,238 560,548

Profit for the period - - - - 64,297 64,297

Total comprehensive income for the period - - - - 64,297 64,297

Transfer from regulatory reserve - - - 95 (95) -

Dividends (Note 10) - - - - (35,708) (35,708)

At 30 June 2016 50,116 172,669 50,116 3,504 312,732 589,137


(These unaudited condensed financial statements should be read in conjunction with the audited financial statements for the financial year ended 31 December 2016 and the

accompanying explanatory notes to the interim financial statements)


(15938-H)(Incorporated in Malaysia)


UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

<-----------------Non-distributable----------------->

6


2017 2016 2017 2016

RM'000 RM'000 RM'000 RM'000


Adjustment for non-operating and non-cash items (4,779) (8,800) (5,126) (9,025)

Operating profit before working capital changes 53,718 77,904 54,662 77,791

Changes in working capital:

Net changes in operating assets (18,852) (213,957) (20,028) (215,054)

Net changes in operating liabilities 68,951 181,511 68,613 178,832

Taxation and zakat paid, net (9,130) (9,405) (9,015) (8,878)

Net cash generated from operating activities 94,687 36,053 94,232 32,691

Net cash generated from/(used in) investing activities 931 (1,635) 931 (1,635)

Net cash used in financing activity - dividends paid - (35,708) - (35,708)

Net increase/(decrease) in cash and cash equivalents 95,618 (1,290) 95,163 (4,652)

Cash and cash equivalents at beginning of the period 580,863 520,651 540,864 481,419

Cash and cash equivalents at end of the period 676,481 519,361 636,027 476,767

Cash and short-term funds 680,283 465,165 639,849 447,091

Deposits and placements with

financial institutions 553,340 305,464 553,320 280,944

1,233,623 770,629 1,193,169 728,035

Less:

Cash and short-term funds and

deposit and placements with

original maturity more than

three months (557,142) (251,268) (557,142) (251,268)

676,481 519,361 636,027 476,767



Group Bank


(15938-H)(Incorporated in Malaysia)


UNAUDITED STATEMENTS OF CASH FLOWS


7

1. Basis of Preparation

Description

MFRS 107 Statement of Cash Flows - Disclosure Initiative (Amendments to MFRS 107) 1 January 2017

MFRS 112 Income Taxes - Recognition of Deferred Tax for Unrealised Losses

(Amendments to MFRS 112) 1 January 2017

MFRS 2 Share-based Payment - Classification and Measurement of Share-based

Payment Transactions (Amendments to MFRS 2) 1 January 2018

MFRS 9 Financial Instruments (IFRS 9 issued by IASB in July 2014) 1 January 2018

MFRS 15 Revenue from Contracts with Customers 1 January 2018

MFRS 15: Classification to MFRS 15 1 January 2018

MFRS 16 Leases 1 January 2019

Annual Improvements to MFRSs 2014 - 2016 Cycle

(i) Amendments to MFRS 12 Disclosure of Interests in Other Entities 1 January 2017

(ii) Amendments to MFRS 1 First-time Adoption of Malaysian Financial Reporting

Standards 1 January 2018

(iii) Amendments to MFRS 128 Investments in Associates and Joint Ventures 1 January 2018

Transfers of Investment Property (Amendments to MFRS 140) 1 January 2018

IC Interpretation 22 Foreign Currency Transactions and Advance Consideration 1 January 2018

Companies Act 2016

(a) the removal of the authorised share capital;

(b) the ordinary shares of the Bank will cease to have par or nominal value; and

(c)

The unaudited condensed interim financial statements of the Group and of the Bank are prepared in accordance with the

requirements of the Companies Act 2016 ("New Act"), which replaced the Companies Act 1965. Amongst the key changes

introduced in the New Act which will affect the financial statements of the Group and of the Bank upon the commencement

of the New Act on 31 January 2017 are:

the Bank’s share premium will become part of the share capital.

During the financial period ended 30 June 2017, the Bank has transferred RM172.7 million share premium to its share

capital. Pursuant to Section 618 of the New Act, the Bank has twenty four (24) months to utilise the amount of share

premium that has been transferred to share capital.

Amendments to MFRS 10 and MFRS 128: Sale or Contribution of Assets

an Investor and its Associate or Joint Venture To be announced by MASB


(15938-H)


Explanatory Notes Pursuant to Malaysian Financial Reporting Standard 134 (“MFRS 134”) Interim Financial Reporting

The unaudited condensed interim financial statements of the Group and of the Bank have been prepared under the

historical cost convention except for the following assets and liabilities that are stated at fair values: financial assets at fair

value through profit or loss, financial investments available-for-sale and derivative financial instruments.

The unaudited condensed interim financial statements have been prepared in accordance with MFRS 134 Interim Financial

Reporting and IAS 34 Interim Financial Reporting.

Effective for annual

periods beginning on

or after

The significant accounting policies and methods of computation applied by the Group and the Bank are consistent with

those adopted in the most recent audited financial statements for the financial year ended 31 December 2016 except for

adoption of the following amendments to Malaysian Financial Reporting Standards (“MFRSs”) and annual improvements to

MFRSs which are effective for annual periods beginning on or after 1 January 2017:

The unaudited condensed interim financial statements should be read in conjunction with the audited financial statements

for the financial year ended 31 December 2016. These explanatory notes attached to the unaudited condensed interim

financial statements provide an explanation of events and transactions that are significant to an understanding of the

changes in the financial position and performance of the Group and of the Bank since the year ended 31 December 2016.

The unaudited condensed interim financial statements include those activities relating to the Islamic banking business which

have been undertaken by the Group. Islamic banking business refers generally to capital market and stockbroking activities

under the principles of Shariah.

8

2. Significant Accounting Policies

3.

4.

5.

6.

7.

8.

9.

10.

11.

There were no issuances, cancellations, share buy-backs, resale of shares bought back and repayment of debt and equity

securities by the Group and the Bank during the second quarter ended 30 June 2017.

There were no material changes in estimates during the second quarter ended 30 June 2017.

Changes in Debt and Equity Securities

Changes in the Composition of the Group

There were no changes in the composition of the Group during the second quarter ended 30 June 2017.

Dividends

Significant and Subsequent Events

There were no significant and subsequent events during the second quarter ended 30 June 2017.

The Board of Directors have proposed a single-tier interim dividend in respect of the financial year ending 31 December

2017 of approximately RM0.70 on 50,116,000 ordinary shares amounting to a net dividend payment of RM35,081,200.

Unusual Items Due to Their Nature, Size or Incidence

During the second quarter ended 30 June 2017, there were no unusual items affecting the assets, liabilities, equity, net

income or cash flows of the Group and of the Bank.

Changes in Estimates

The operations of the Group and of the Bank were not materially affected by any seasonal or cyclical factors in the second

quarter ended 30 June 2017.

(15938-H)


Seasonal or Cyclical Factors

In preparing these unaudited condensed interim financial statements, the significant judgements made by management in

applying the Group’s and the Bank's accounting policies and the key sources of estimation uncertainty were the same as

those that applied to the audited financial statements for the financial year ended 31 December 2016.

The audited financial statements of the Group and of the Bank for the financial year ended 31 December 2016 were

prepared in accordance with MFRS, International Financial Reporting Standards ("IFRS") and the requirements of the

Companies Act, 1965 in Malaysia. The significant accounting policies adopted in preparing these unaudited condensed

interim financial statements are consistent with those of the audited financial statements for the financial year ended 31

December 2016.

The preparation of unaudited condensed interim financial statements requires management to make judgments, estimates

and assumptions that affect the application of accounting policies and the reported amounts of income, expenses, assets,

liabilities, the accompanying disclosures and the disclosure of contingent liabilities. Although these estimates and judgments

are based on management’s best knowledge of current events and actions, actual results may differ.

The auditors' report on the audited financial statements for the financial year ended 31 December 2016 was not qualified.


Auditors' Report on Preceding Annual Financial Statements

Significant Accounting Estimates and Judgements

9

12.

13.

Against the backdrop of selective growth in the region, the investment banking industry is expected to remain challenging

due to uncertainty in market conditions and investor sentiments.

Overhead expenses increased by 2.1% or RM2.8 million to RM138.6 million from RM135.7 million. This was mainly due to

higher personnel expenses. However, it was partly offset by the decrease in establishment costs.

Barring any unforeseen circumstances, the Group expects its financial performance for 2017 to be satisfactory given the

ongoing challenging global environment.

Business Outlook

(15938-H)

Malaysia's real GDP 2017 growth is supported by improvement in the manufacturing and services sectors amid exports

recovery, higher consumer spending and investment growth. Investment growth for 2017 and 2018 are expected to be

underpinned by the rollout of major infrastructure projects by the government. The Overnight Policy Rate is expected to

remain unchanged at 3.00% in 2017.

Global real Gross Domestic Product ("GDP") growth is forecasted to expand at +3.5% in 2017 (2016: +3.2%), from

improved growth in the US (2017E: +2.1%; 2016: +1.6%) and India (2017: +7.2%; 2016: +7.1%), sustained growth in

Europe (2017E: +1.9%), low growth in Japan (2017E: +1.3%; 2016: +1.0%), as well as recoveries in markets like Brazil and

Russia.

Meanwhile, the ASEAN-6 countries could chart relatively faster growth in 2017 at 4.8% (2016: +4.6%) supported by the

recovery in external demand coupled with sustained momentum in domestic demand. Singapore is forecasted to grow at

+3.0% (2016: +2.0%), Malaysia expected to expand at +5.5% (2016: +4.2%) and Indonesia to remain resilient at +5.1%

(2016: +5.0%).

The Group's profit before taxation and zakat decreased by 32.5% or RM28.2 million from RM86.7 million to RM58.5 million.

Profit for the period decreased by 33.7% or RM21.5 million to RM42.3 million compared to the previous corresponding

period.

Performance Review



For the period ended 30 June 2017, the Group recorded a lower operating profit compared to the previous corresponding

period mainly due to drop in non-interest income earned during the period. Operating profit decreased by 29.3% from

RM86.0 million to RM60.8 million.

Net interest income reduced by 6.8% to RM8.0 million and non-interest income decreased by 28.9% from RM201.4 million

to RM143.1 million due to lower fee-based income from investment banking business. However, the Islamic Banking income

increased by RM36.5 million from RM11.8 million to RM48.2 million. Overall, net income declined by 10.1% or RM22.4

million to RM199.4 million.

10

Appendix A

14.

30 June 31 December 30 June 31 December

2017 2016 2017 2016

RM'000 RM'000 RM'000 RM'000

Cash and bank balances with financial institutions 247,883 208,951 241,463 201,479

Deposit placements maturing within one month 432,400 325,178 398,386 292,671

Total cash and short-term funds 680,283 534,129 639,849 494,150

15. Deposits and placements with financial institutions


2017 2016 2017 2016

RM'000 RM'000 RM'000 RM'000

Licensed bank 553,340 388,587 553,320 388,567

16. Financial investments portfolio

30 June 31 December

2017 2016

RM'000 RM'000

Financial assets at fair value through profit or loss (i) 525,617 468,930

Financial investments available-for-sale (ii) 39,445 39,445

Financial investments held-to-maturity (iii) 33 33

Total financial investments portfolio 565,095 508,408

(i) Financial assets at fair value through profit or loss

30 June 31 December

2017 2016

At fair value RM'000 RM'000

Quoted financial investments:

Shares in Malaysia 371,814 337,563

Shares outside Malaysia 143,816 120,017

515,630 457,580

Unquoted financial investments:

Structured product 9,987 11,350

Total financial assets at fair value through profit or loss 525,617 468,930


(15938-H)


Cash and short-term funds

Group Bank

Group and Bank

Group Bank

Group and Bank

The monies held-in-trust for clients by the Group and by the Bank as at the reporting date are approximately

RM379,123,000 (2016: RM173,369,000). These amounts are excluded from the cash and short-term funds of the Group

and of the Bank in accordance with FRSIC Consensus 18 Monies Held-in-Trust by Participating Organisation at Bursa

Malaysia Securities Berhad.

11

Appendix A

16. Financial investments portfolio (Cont'd)

(ii) Financial investments available-for-sale

30 June 31 December

2017 2016

At fair value, or at cost for certain unquoted equity RM'000 RM'000

instruments, less accumulated impairment loss


Shares and loan stocks in Malaysia 39,445 39,445

Total financial investments available-for-sale 39,445 39,445

(iii) Financial investments held-to-maturity

30 June 31 December

2017 2016

At amortised cost RM'000 RM'000


Private debt securities in Malaysia 33 33

Total financial investments held-to-maturity 33 33

17. Loans and advances

30 June 31 December

2017 2016

RM'000 RM'000

Term loans

- Syndicated term loan - 6,447

- Other term loan 20,167 17,749

Amount due from brokers and clients

- Margin accounts 265,798 258,717

Staff loans 22,681 23,337

Gross loans and advances 308,646 306,250

Less: Allowance for impairment losses

- Individual assessment allowance (266) (6,270)

- Collective assessment allowance (113) (104)

Net loans and advances 308,267 299,876

(i) Loans and advances analysed by type of customer are as follows:

30 June 31 December

2017 2016

RM'000 RM'000

Domestic business enterprises 76,504 80,482

Individuals 229,110 220,064

Foreign entities 3,032 5,704




(15938-H)

Group and Bank

Group and Bank

Group and Bank

Group and Bank

12

Appendix A

17. Loans and advances (Cont'd)

(ii) Loans and advances analysed by interest rate sensitivity are as follows:

30 June 31 December

2017 2016

RM'000 RM'000

Fixed rate

- Housing loans 11,561 11,522

- Hire purchase receivables 10,574 11,541

- Other fixed rate loans 546 6,721

Variable rate

- BLR/BR-plus 265,798 258,717

- Cost-plus 20,167 17,749


(iii) Loans and advances analysed by economic purpose are as follows:

30 June 31 December

2017 2016

RM'000 RM'000

Purchase of securities 265,798 258,717

Purchase of transport vehicles 10,574 11,541

Purchase of residential landed property 11,561 11,522

Personal use 546 274

Working capital - 6,447

Others 20,167 17,749


(iv) The maturity structure of loans and advances are as follows:

30 June 31 December

2017 2016

RM'000 RM'000

Maturing within one year 266,490 265,564

One year to three years 3,253 2,782

Three years to five years 27,216 26,360

After five years 11,687 11,544


(v) Movements in impaired loans and advances are as follows:

30 June 31 December

2017 2016

RM'000 RM'000

At 1 January 7,083 6,981

Impaired during the period - 116

Recovered/regularised during the period (6,454) (14)

Gross impaired loans and advances 629 7,083

Less: Allowance for impairment losses

- Individual assessment allowance (266) (6,270)

Net impaired loans and advances 363 813

Net impaired loans and advances as % of gross loans

and advances less individual assessment allowance 0.12% 0.27%

Group and Bank

Group and Bank

Group and Bank


(15938-H)


Group and Bank

13

Appendix A

17. Loans and advances (Cont'd)

(vi) Impaired loans and advances analysed by economic purpose are as follows:

30 June 31 December

2017 2016

RM'000 RM'000

Purchase of transport vehicles 159 159

Purchase of residential landed property 470 477

Working capital - 6,447

Gross impaired loans and advances 629 7,083

(vii) Movements in the allowance for impairment losses are as follows:

30 June 31 December

2017 2016

RM'000 RM'000

Individual assessment allowance

At 1 January 6,270 6,267

Allowance made during the period (Note 25) - 3

Amount written off during the period (Note 25) (6,004) -

Balance at end of period 266 6,270

Collective assessment allowance

At 1 January 104 -

Allowance made during the period (Note 25) 9 104

Balance at end of period 113 104

18. Other assets


2017 2016 2017 2016

RM'000 RM'000 RM'000 RM'000

Amount due from brokers and clients

- Non-margin accounts (a) 553,124 685,716 553,124 685,716

Amount due from holding company 8,895 11,971 8,895 11,971

Other debtors, deposits and prepayment 82,561 73,036 77,389 67,397

644,580 770,723 639,408 765,084

Less: Allowance for impairment losses (16,140) (14,848) (12,415) (11,145)

628,440 755,875 626,993 753,939

(a)

Group and Bank

Group and Bank

Group Bank

Amount due from brokers and clients relate to outstanding purchase contracts entered into on behalf of clients,

contra gains and losses, other fees and charges.



(15938-H)

14

Appendix A

19. Other liabilities


2017 2016 2017 2016

RM'000 RM'000 RM'000 RM'000

Provisions and accruals 46,797 85,384 46,615 85,202

Amount due to brokers and clients (a) 547,473 691,678 547,473 691,678

Deposits and other creditors 799,492 525,980 797,247 523,915

Amount due to:

- Holding company 56,543 73,459 56,543 73,459

- Related companies 7,615 7,521 7,615 7,521

- Subsidiaries - - 171,474 171,634

1,457,920 1,384,022 1,626,967 1,553,409

(a)

20. Derivative financial instruments

(i) Derivative assets

Contract/ Contract/

Notional Fair Notional Fair

amount value amount value

RM'000 RM'000 RM'000 RM'000

Equity related derivatives:

Equity swaps

- Less than one year 81,127 13,093 320,098 19,839

(ii) Derivative liabilities

Contract/ Contract/

Notional Fair Notional Fair

amount value amount value

RM'000 RM'000 RM'000 RM'000


Equity options


Equity swaps


404,999 107,806 185,035 31,109

Amount due to brokers and clients represent net amount payable to margin and non-margin clients, which include

outstanding sales contracts entered into on behalf of clients, contra gains and losses, other fees and charges.

2016

31 December

2016

Group Bank

Group and Bank

30 June

2017

Group and Bank

30 June 31 December

2017


(15938-H)


15

Appendix A

20. Derivative financial instruments (cont'd.)

(iii)


2017 2016 2017 2016

RM'000 RM'000 RM'000 RM'000


Index futures - 45 5 1,004

Equity options (646) 25,298 (8,134) 24,756

Equity swaps 11,770 (7,317) (81,091) (273)

11,124 18,026 (89,220) 25,487

21. Interest income


2017 2016 2017 2016

Group RM'000 RM'000 RM'000 RM'000

Loans and advances

- Interest income other than on impaired

loans 5,566 5,239 11,045 10,293

- Interest income on impaired loans 25 40 47 73

Money at call and deposits and placements

with financial institutions 5,802 3,506 10,465 6,774

Others 385 211 743 392

Total interest income 11,778 8,996 22,300 17,532


2017 2016 2017 2016

Bank RM'000 RM'000 RM'000 RM'000

Loans and advances

- Interest income other than on impaired

loans 5,566 5,239 11,045 10,293

- Interest income on impaired loans 25 40 47 73

Money at call and deposits and placements

with financial institutions 5,542 3,242 9,954 6,221

Others 385 211 743 392

Total interest income 11,518 8,732 21,789 16,979

22. Interest expense


2017 2016 2017 2016

Group and Bank RM'000 RM'000 RM'000 RM'000

Deposits and placements from a licensed bank 3,337 2,764 6,404 5,875

Derivative financial instruments 4,165 1,773 7,859 3,031

Total interest expense 7,502 4,537 14,263 8,906




The Group and the Bank have recognised the fair value changes on the derivative financial instruments as

follows (Note 23):


(15938-H)



Group and Bank

16

Appendix A

23. Non-interest income


2017 2016 2017 2016

Group RM'000 RM'000 RM'000 RM'000

Fee and commission income:

Arranger and upfront fees 6,475 16,617 12,519 21,470

Brokerage income 50,416 33,436 96,566 72,065

Corporate advisory fees 3,772 4,446 5,324 81,672

Placement and related fees 3,097 (58) 3,100 1,815

Underwriting commission 908 870 1,421 1,411

Others 3,430 1,309 6,525 3,186

68,098 56,620 125,455 181,619

Investment income:

Realised gain/(loss) from sale of financial assets at

fair value through profit or loss, net 15,658 (18,368) 36,026 (26,833)

Unrealised (loss)/gain on revaluation of financial

assets at fair value through profit or loss, net (9,448) (11,528) 91,922 (21,262)

Realised (loss)/gain from sale of derivative financial

instruments, net (14,565) 22,297 (29,759) 33,232

Unrealised gain/(loss) on revaluation of derivative

financial instruments, net (Note 20 (iii)) 11,124 18,026 (89,220) 25,487

Gross dividends from:

Financial assets at fair value through profit or loss

- Quoted in Malaysia 2,170 2,494 2,238 4,118

- Quoted outside Malaysia 431 - 431 -

5,370 12,921 11,638 14,742

Other income:

Unrealised foreign exchange gain from securities

Foreign exchange gain, net 2,012 2,237 3,824 2,015

Gain from disposal of property, plant and equipment - 42 - 42

Others 1,197 1,424 2,196 2,947

3,209 3,703 6,020 5,004

Total non-interest income 76,677 73,244 143,113 201,365

Quarter Ended


(15938-H)


Cumulative 6 Months Ended

17

Appendix A

23. Non-interest income (Cont'd)


2017 2016 2017 2016

Bank RM'000 RM'000 RM'000 RM'000

Fee and commission income:

Arranger and upfront fees 6,475 16,617 12,519 21,470

Brokerage income 50,416 33,436 96,566 72,065

Corporate advisory fees 3,052 2,740 4,282 79,419

Placement and related fees 3,097 (58) 3,100 1,815

Underwriting commission 908 870 1,421 1,411

Others 3,430 1,309 6,525 3,186

67,378 54,914 124,413 179,366

Investment income:

Realised gain/(loss) from sale of financial assets at

fair value through profit or loss, net 18,374 (18,368) 36,026 (26,833)

Unrealised (loss)/gain on revaluation of financial

assets at fair value through profit or loss, net (9,448) (11,528) 91,922 (21,262)

Realised (loss)/gain from sale of derivative financial

instruments, net (17,281) 22,297 (29,759) 33,232

Unrealised gain/(loss) on revaluation of derivative

financial instruments, net (Note 20 (iii)) 11,124 18,026 (89,220) 25,487

Gross dividends from:


- Quoted in Malaysia 2,170 2,494 2,238 4,118

- Quoted outside Malaysia 431 - 431 -

5,370 12,921 11,638 14,742

Other income:

Foreign exchange gain, net 2,012 2,236 3,824 2,014

Gain from disposal of property, plant and equipment - 42 - 42

Others 1,194 1,428 2,193 2,952

3,206 3,706 6,017 5,008

Total non-interest income 75,954 71,541 142,068 199,116

(15938-H)




18

Appendix A

24. Overhead expenses


2017 2016 2017 2016

Group RM'000 RM'000 RM'000 RM'000

Personnel expenses

- Salaries, allowances and bonuses 46,280 42,477 91,378 83,255

- Pension costs - defined contribution plan 4,732 4,364 9,204 8,567

- Employees' Share Scheme expenses 1,236 1,792 2,425 3,482

- Other staff related expenses 2,680 3,301 4,572 5,467

54,928 51,934 107,579 100,771

Establishment costs

- Depreciation of property, plant and equipment 1,579 1,626 3,184 3,273

- Amortisation of computer software 1,017 1,155 2,027 2,137

- Rental 2,720 2,777 5,526 5,714

- Repairs and maintenance of property,

plant and equipment 2,907 2,489 4,758 5,906

- Information technology expenses 3,263 3,108 6,403 5,377

- Service chargeback (6,552) (3,725) (11,437) (7,466)

- Others 439 468 818 1,364

5,373 7,898 11,279 16,305

Marketing costs

- Advertisement and publicity 3,350 2,500 6,030 5,938

- Others 1,368 2,026 2,806 3,009

4,718 4,526 8,836 8,947

Administration and general expenses

- Fee and brokerage 3,084 3,413 7,211 5,842

- Administrative expenses 1,053 986 1,870 1,800

- General expenses 1,026 967 1,805 2,066

5,163 5,366 10,886 9,708

Total overhead expenses 70,182 69,724 138,580 135,731


(15938-H)



19

Appendix A

24. Overhead expenses (Cont'd)


2017 2016 2017 2016

Bank RM'000 RM'000 RM'000 RM'000

Personnel expenses

- Salaries, allowances and bonuses 46,280 42,477 91,378 83,255

- Pension costs - defined contribution plan 4,732 4,364 9,204 8,567

- Employees' Share Scheme expenses 1,236 1,792 2,425 3,482

- Other staff related expenses 2,680 3,300 4,572 5,466

54,928 51,933 107,579 100,770

Establishment costs

- Depreciation of property, plant and equipment 1,579 1,626 3,184 3,273

- Amortisation of computer software 1,017 1,155 2,027 2,137

- Rental 2,720 2,777 5,526 5,714

- Repairs and maintenance of property,

plant and equipment 2,906 2,489 4,757 5,905

- Information technology expenses 3,263 3,108 6,403 5,377

- Service chargeback (7,282) (5,367) (12,871) (9,930)

- Others 439 468 818 1,364

4,642 6,256 9,844 13,840

Marketing costs

- Advertisement and publicity 3,350 2,500 6,030 5,938

- Others 1,369 2,032 2,814 3,032

4,719 4,532 8,844 8,970

Administration and general expenses

- Fee and brokerage 3,065 3,384 7,170 5,792

- Administrative expenses 1,040 945 1,842 1,742

- General expenses 1,026 953 1,805 2,052

5,131 5,282 10,817 9,586

Total overhead expenses 69,420 68,003 137,084 133,166

Cumulative 6 Months Ended


(15938-H)


Quarter Ended

20

Appendix A

25. Allowance for impairment on loans and advances and other debtors, net


2017 2016 2017 2016

Group RM'000 RM'000 RM'000 RM'000

Allowance for impairment on loans and advances:

- Individual allowance made - (3) - (3)

- Collective allowance made 5 - (9) -

Bad debts recovered 236 453 332 561

Allowance for impairment on other debtors, net 219 16 (1,292) (549)

Total 460 466 (969) 9


2017 2016 2017 2016

Bank RM'000 RM'000 RM'000 RM'000

Allowance for impairment on loans and advances:

- Individual allowance made - (3) - (3)

- Collective allowance made 5 - (9) -

Bad debts recovered 236 453 332 561

Allowance for impairment on other debtors, net 219 91 (1,292) (324)

Total 460 541 (969) 234

26. Capital adequacy

(I) Capital Adequacy Framework

Group Bank

At 30 June 2017 % %

CET1 capital ratio 32.093 30.140

Tier 1 capital ratio 32.093 30.140

Total capital ratio 32.142 30.140

Group Bank

At 31 December 2016 % %

CET1 capital ratio 33.010 30.758

Tier 1 capital ratio 33.010 30.758

Total capital ratio 33.010 30.758

The capital adequacy ratios of the Group and of the Bank are as follows:

(15938-H)


The capital adequacy ratios of the Group consist of capital base and risk-weighted assets derived from consolidated

balances of the Bank and its subsidiary companies. The capital adequacy ratios of the Bank consist of capital base

and risk-weighted assets derived from the Bank.

The Group and the Bank adopted the Standardised Approach for Credit Risk and Market Risk, and the Basic

Indicator Approach for Operational Risk.


The computation of capital adequacy ratios are based on Bank Negara Malaysia ("BNM") Capital Adequacy

Framework (Capital Components) and Capital Adequacy Framework (Basel II - Risk Weighted Assets) issued on 28

November 2012.

The minimum regulatory capital adequacy requirements for Common Equity Tier 1 ("CET1"), Tier 1 and Total

Capital are 4.5%, 6.0% and 8.0% of total risk-weighted assets respectively.



21

Appendix A

26. Capital adequacy (Cont'd)

(I) Capital Adequacy Framework (Cont'd)

Group Bank

At 30 June 2017 RM'000 RM'000

Paid-up share capital 222,785 222,785

Other reserves 358,930 349,474

CET1 capital before regulatory adjustments 581,715 572,259

Less: Deferred tax assets (5,519) (5,519)

Intangible assets (15,470) (15,470)

Investment in subsidiaries and joint venture¹ (10,995) (42,193)

CET1 capital/Tier 1 capital 549,731 509,077

Tier 2 capital

Regulatory reserve 3,587 3,587

Less: Regulatory adjustment applied in Tier 2 capital


Tier 2 capital 838 -

Total capital 550,569 509,077

Group Bank

At 31 December 2016 RM'000 RM'000

Paid-up share capital 50,116 50,116

Share premium 172,669 172,669

Statutory reserves 50,116 50,116

Other reserves 267,591 255,747

CET1 capital before regulatory adjustments 540,492 528,648

Less: Deferred tax assets (14,465) (14,465)

Intangible assets (16,687) (16,687)


CET1 capital/Tier 1 capital/Total capital 497,058 455,213

Tier 2 capital

Regulatory reserve 3,497 3,497

Less: Regulatory adjustment applied in Tier 2 capital


Tier 2 capital - -

Total capital 497,058 455,213

¹ Excludes the cost of investment in a subsidiary, Maysec Sdn. Bhd. of RM171,475,000 as its business, assets and

liabilities had been transferred to the Bank on 30 December 2006.

(15938-H)


The components of capital of the Group and of the Bank are as follows (Cont'd):


22

Appendix A


(II)

Group

30 June 2017

Net

Exposures

Exposure Class RM'000 RM'000 RM'000 RM'000

(i) Credit Risk

Sovereigns/Central banks 342,019 342,019 - -

Banks, Development Financial

Institutions ("DFIs") and Multilateral

Development Banks ("MDBs") 1,304,802 1,304,802 430,564 34,445

Corporates 78,265 37,417 37,417 2,993

Regulatory retail 229,177 100,262 94,993 7,600

Higher risk assets 39,445 39,445 59,168 4,733

Other assets 96,628 96,628 85,197 6,816

Total on-balance sheet exposures 2,090,336 1,920,573 707,339 56,587

Off-balance sheet exposures:

Credit-related off-balance sheet

exposures 1,125,426 1,125,426 287 23

Total off-balance sheet exposures 1,125,426 1,125,426 287 23

Total on and off-balance sheet exposures 3,215,762 3,045,999 707,626 56,610

(ii) Market Risk

Interest rate risk - - 538 43

Equity position risk - - 19,004 1,520

Foreign currency risk - - 170,195 13,615

Options risk - - 3,250 260

Total - - 192,987 15,438

(iii) Operational Risk - - 812,310 64,985

Total RWA and capital requirements 3,215,762 3,045,999 1,712,924 137,034


(15938-H)


Capital

requirements

The breakdown of RWA by exposures in each major risk category are as follows:

Gross

exposures

Risk-

weighted

assets

23

Appendix A


(II)

Group

31 December 2016

Net

Exposures


(i) Credit Risk

On-balance sheet exposures:




Development Banks ("MDBs") 859,976 859,976 267,686 21,415

Corporates 83,968 22,578 20,121 1,610



Other assets 83,201 83,201 77,895 6,232




exposures 1,114,931 1,114,931 1,640 131

Total off-balance sheet exposures 1,114,931 1,114,931 1,640 131


(ii) Market Risk


Equity position risk - - 7,377 590



Total - - 162,713 13,015




(15938-H)


Gross

exposures

The breakdown of RWA by exposures in each major risk category are as follows (Cont'd):

Risk-

weighted

assets

Capital

requirements

24

Appendix A


(II)

Bank

30 June 2017

Net

Exposures


(i) Credit Risk




Development Banks ("MDBs") 1,264,387 1,264,387 422,481 33,798

Corporates 78,265 37,417 37,417 2,993



Other assets 95,126 95,126 83,697 6,696




exposures 1,125,426 1,125,426 287 23

Total off-balance sheet exposures 1,125,426 1,125,426 287 23


(ii) Market Risk


Equity position risk - - 19,004 1,520



Total - - 187,851 15,028




Gross

exposures

Risk-

weighted

assets

Capital

requirements


(15938-H)


25

Appendix A


(II)

Bank

31 December 2016

Net

Exposures


(i) Credit Risk





Development Banks ("MDBs") 820,017 820,017 259,694 20,776

Corporates 83,968 22,578 20,121 1,610



Other assets 81,385 81,385 76,081 6,086




exposures 1,114,931 1,114,931 1,640 131

Total off-balance sheet exposures 1,114,931 1,114,931 1,640 131


(ii) Market Risk


Equity position risk - - 7,377 590



Total - - 157,227 12,577



Gross

exposures

Risk-

weighted

assets

Capital

requirements


(15938-H)



26

27. Commitments and contingencies

Credit Risk- Credit Risk-

Notional equivalent weighted Notional equivalent weighted

amount amount* amount amount amount* amount

Group and Bank RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Credit-related

Obligations under underwriting

agreements - - - - - -

Revocable commitments to

extend credit:

- Maturity not exceeding one year 1,124,852 - - 1,111,651 - -

- Maturity exceeding one year 574 287 287 3,280 1,640 1,640

1,125,426 287 287 1,114,931 1,640 1,640

Derivative financial instruments

Equity related contracts

- Less than one year 486,126 - - 505,133 - -

Total commitments and

contingencies 1,611,552 287 287 1,620,064 1,640 1,640

*

Contingent liabilities

Case 1

Case 2


(15938-H)


As at As at

30 June 2017 31 December 2016

The credit equivalent amount and the risk weighted amout are derived at using the credit evaluation conversion

factors and risk weights respectively as specified by BNM for regulatory capital adequacy purposes.

On 5 November 2012, four (4) holders of a bond (“Bondholders”) issued by a company filed a claim against the Bank

and five (5) other defendants to recover their losses arising from the limited recovery made by the Bondholders following

the default of the company’s bonds. The claims by the Bondholders, inter alia, include the sum of RM156.3 million or

any other sum that the Court deems fit.

The Group and the Bank are aggressively defending all of the claims under litigation, through their solicitors, the

outcomes of which are subject matter for the Courts to eventually determine.

The Bank and four (4) other financial institutions (collectively known as “the Banks”) are holders of 48.54% of the

Redeemable Convertible Secured Notes (“the Notes”) issued by a company (“the Borrower”). The Notes are secured by

various security including charges over lands granted by the Borrower and other 3rd parties in favour of the trustee for

the Banks (“the Trustee”). Upon the Borrower’s default of its payment obligations, the Banks commenced action to

recover the sums due under the Notes.

Following an order in terms of a joinder application by two (2) applicants to be added as 5th and 6th plaintiffs to the suit,

the quantum of the claim increased from RM156.3 million to RM177.3 million to reflect the 5th and 6th plaintiffs’

respective claims. On 17 September 2014, a 7th plaintiff was added and joined to the suit with no change to the

quantum claimed of RM177.3 million.

Subsequently, a company (“the 1st Defendant”) and an individual (“the 2nd Defendant”) (collectively known as “the

Defendants”) agreed to resolve the claims of the Banks with the 1st Defendant agreeing to purchase from the Banks all

the Notes held by the Banks at a total purchase price of RM146,458,246.20. The Banks and the 1st Defendant entered

into a Sale and Purchase Agreement in August 2014 (“the SPA”) and the 2nd Defendant executed a guarantee in favour

of the Banks guaranteeing all sums due under the SPA.

On 24 July 2017, the High Court found that the Plaintiffs had proven their claim in the sum of RM177.3 million (‘the

Judgment Sum’) against all the Defendants. The Judgment Sum is only the principal sum and excludes interest and cost

that have yet to be awarded and accounted for. The Bank will submit on consequential orders including interest and on

the issue of costs on 31 July 2017.

The Defendants subsequently defaulted on their payment obligations under the SPA and on 5 June 2015, the Banks

commenced action against the Defendants for specific performance of the SPA or in the alternative, damages for breach

of the SPA (as against the 1st Defendant) and for the balance purchase price (as against the 2nd Defendant).

On 18 August 2017, the parties submitted on the quantum of the Judgment Sum, applicable interest and costs. The

Court has fixed 11 September 2017 for decision of the foregoing.

27

27. Commitments and contingencies (Cont'd)

Contingent liabilities (Cont'd)

Case 2 (Cont'd)

28. Segment information

The Group's business segments are defined and categorised as follows:

(i) Pillar 1 - Investment banking and advisory

(ii) Pillar 2 - Equities

Equities primarily engage in the shares and futures broking services and derivative financial instruments.

(iii) Others

This segment includes investment holding, nominee and custodian services.

On 22 July 2015, by way of a counterclaim against the Banks and the Trustee, the Defendants prayed for 11

declarations against the Banks and the Trustee and among other prayers, claimed that the Defendants are entitled to

the restoration of the sums of RM14,645,824.62 (10% deposit payment) and RM1 million (ex-gratia payment) paid by the

1st and 2nd Defendants respectively, being the sums forfeited by the Banks upon breach of the SPA as well as for

interest, costs and damages to be assessed.

The Banks filed an application for summary judgement against the Defendants and an application to strike out the

Defendants’ counterclaim. The Defendants had on 19 August 2015 filed an injunction application to restrain the Trustee

from proceeding with foreclosure proceedings and the Bank from enforcing the Put Option Judgement pending disposal

of the counterclaim action against the Banks and the Trustee.

On 5 October 2015, the High Court allowed the Banks' application for summary judgement and application to strike out

the counterclaim with costs. Accordingly, the Defendants' counterclaim against the Banks have been struck out

("Striking Out Order") and judgement has been entered against the Defendants for the balance purchase price under the

SPA ("Summary Judgement"). On 23 October 2015, the Defendants filed their respective appeals to the Court of Appeal

against the Striking Out Order and the Summary Judgement (‘the Appeals’).

Segment information is presented in respect of the Group’s business segments.

Segment revenue, results, assets and liabilities include items directly attributable to a segment, as well as those that

can be allocated on a reasonable basis.

Investment banking and advisory focus on business needs of mainly large corporate customers and financial

institutions. The products and services offered to customers include corporate advisory services, bond issuance,

equity issuance, syndicated acquisition advisory services and debt restructuring advisory services.


(15938-H)


On 6 December 2016, the Court of Appeal unanimously dismissed the Appeals with costs of RM20,000 to be paid by the

Defendants to the Banks for each of the Appeals (‘COA Decision’).

On 30 December 2016 and 5 January 2017, the 1st Defendant and 2nd Defendant filed their respective applications to

the Federal Court for leave to appeal to the Federal Court against the COA Decision ('FC Leave Application'). On 26

April 2017, the Federal Court allowed the FC Leave Application. The 1st Defendant and the 2nd Defendant can now file

their appeals to the Federal Court against the Summary Judgment (‘FC Appeals’). The FC Appeals are now fixed for

case management on 11 October 2017 pending the 1st Defendant and the 2nd Defendant obtaining the written grounds

from the Court of Appeal on the COA Decision.

The Banks opposed the injunction application and on 3 September 2015, the court dismissed the injunction application

with costs ("High Court Order"). The Defendants appealed to the Court of Appeal against the High Court Order

("Appeal") and in the interim applied to the Court of Appeal for an interim injunction pending disposal of the Appeal. On 8

September 2015, the Court of Appeal dismissed the motion for interim injunction with costs.

The business segments are prepared based on internal management reports, which are used by senior management for

decision-making and performance management. The amounts for each business segment are shown after the allocation

of certain centralised cost, funding income and the applicable transfer pricing where appropriate. Transactions between

segments are recorded within the segment as if they are third party transactions and are eliminated on consolidation. All

inter-segment transactions are conducted at arm’s length basis on normal commercial terms that are not more

favourable than those generally available to the public.

28

28. Segment information (Cont'd)

Group Pillar 1 Pillar 2 Others Total

30 June 2017 RM'000 RM'000 RM'000 RM'000

Revenue

Net interest income 2,247 5,790 - 8,037

Net income from Islamic Banking Scheme

operations 45,721 2,526 - 48,247

Non-interest income 26,039 117,074 - 143,113

Total revenue 74,007 125,390 - 199,397

Results

Segment results 74,007 125,390 - 199,397

Overhead expenses (28,964) (57,397) (52,219) (138,580)

Allowance for impairment on

loans and advances and other debtors, net (766) (203) - (969)

Share of results of a joint venture - - (1,351) (1,351)

Profit before taxation 44,277 67,790 (53,570) 58,497

Taxation and zakat (16,183)

Profit for the period 42,314

Other segment information

Depreciation 207 1,567 1,410 3,184

Amortisation 212 1,209 606 2,027

Group Pillar 1 Pillar 2 Others Total

30 June 2016 RM'000 RM'000 RM'000 RM'000

Revenue

Net interest income 1,653 6,973 - 8,626

Net income from Islamic Banking Scheme

operations 9,603 2,167 - 11,770

Non-interest income 96,638 106,437 (1,710) 201,365

Total revenue 107,894 115,577 (1,710) 221,761

Results

Segment results 107,894 115,577 (1,710) 221,761

Overhead expenses (31,314) (59,459) (44,958) (135,731)

Allowance for impairment on loans

and advances and other debtors, net (704) 713 - 9

Writeback of impairment on derivative assets - 789 - 789

Share of results of a joint venture - - (124) (124)

Profit before taxation 75,876 57,620 (46,792) 86,704

Taxation and zakat (22,859)

Profit for the period 63,845

Other segment information

Depreciation 222 1,468 1,583 3,273

Amortisation 141 1,257 739 2,137


(15938-H)

The following table provides analysis of the Group's revenue, results, assets, liabilities and other information by

business segments:


29

29. Net income from Islamic Banking Scheme operations

Unaudited Statements of Financial Position as at 30 June 2017

30 June 31 December

2017 2016

Notes RM'000 RM'000

ASSETS

(a) 7,981 2,880

(b) 337,881 326,287

345,862 329,167

(c) 146,239 154,985

(d) 7,149 630

153,388 155,615

ISLAMIC BANKING FUND

5,000 5,000

187,474 168,552

192,474 173,552

Total liabilities and Islamic banking fund 345,862 329,167

Unaudited Statements of Comprehensive Income

For the Second Quarter Ended 30 June 2017


2017 2016 2017 2016

Group and Bank Notes RM'000 RM'000 RM'000 RM'000

Income derived from investment of

Islamic banking capital funds (e) 4,790 8,158 48,247 11,770

Income attributable to the Group

and the Bank 4,790 8,158 48,247 11,770

Overhead expenses (f) (4,360) (6,965) (22,144) (9,953)

Operating profit 430 1,193 26,103 1,817

(Allowance for)/writeback of impairment

on other debtors - (80) 130 (80)

Profit before taxation and zakat 430 1,113 26,233 1,737

Taxation (103) (266) (6,296) (416)

Zakat (174) - (1,015) -

Profit for the period, representing

total comprehensive income for

the period, attributable to equity

holder of the Bank 153 847 18,922 1,321

Total liabilities

Islamic banking capital fund

Retained earnings

Provision for taxation and zakat


(15938-H)


Cash and short-term funds

Group and Bank

Other assets

Total assets

LIABILITIES

Other liabilities


30

29. Net income from Islamic Banking Scheme operations (Cont'd)

Unaudited Statements of Changes in Equity


Islamic

banking Distributable

capital retained

fund earnings Total

Group and Bank RM'000 RM'000 RM'000

At 1 January 2017 5,000 168,552 173,552

Profit for the period - 18,922 18,922

Total comprehensive income for the period - 18,922 18,922

At 30 June 2017 5,000 187,474 192,474

At 1 January 2016 5,000 167,545 172,545

Profit for the period - 1,321 1,321

Total comprehensive income for the period - 1,321 1,321

At 30 June 2016 5,000 168,866 173,866

Unaudited Statements of Cash Flows


30 June 30 June

2017 2016

RM'000 RM'000

Cash flows from operating activities

Profit before taxation and zakat, representing operating

before working capital changes 26,233 1,737

(Increase)/decrease in receivables (11,594) 19,663

(Decrease)/increase in payables (9,538) 10,310

Net cash generated from operating activites 5,101 31,710

Net increase in cash and cash equivalents 5,101 31,710

Cash and cash equivalents at beginning of the period 2,880 2,365

Cash and cash equivalents at end of the period 7,981 34,075


(15938-H)

Group and Bank


31


(a) Cash and short-term funds

30 June 31 December

2017 2016

Cash and bank balances with financial institutions 7,981 2,880

(b) Other assets

30 June 31 December

2017 2016

RM'000 RM'000

Debtors and prepayments 337,881 326,287

(c) Other liabilities

30 June 31 December

2017 2016

RM'000 RM'000

Provisions and accruals 146,239 154,985

(d) Provision for taxation and zakat

30 June 31 December

2017 2016

RM'000 RM'000

Taxation 6,296 318

Zakat 853 312

7,149 630

(e) Income derived from investment of Islamic banking capital funds


2017 2016 2017 2016


Realised gain from sale of financial assets

at fair value through profit or loss, net 253 - 253 -

Fee and commission income from:

- Arranger and upfront fees 1,182 4,841 26,513 6,130

- Brokerage income 1,230 1,307 2,526 2,167

- Corporate advisory fees 520 135 16,060 235

- Underwriting commission - - - 625

- Placement fees - 150 - 150

- Others 1,605 1,725 2,895 2,734

Foreign exchange loss, net - - - (271)

Total 4,790 8,158 48,247 11,770


(15938-H)


Group and Bank


Group and Bank

Group and Bank

Group and Bank

32


(f) Overhead expenses


2017 2016 2017 2016


Personnel expenses 3,018 5,111 15,479 7,306

Establishment costs

- Service chargeback 40 (483) (867) (747)

- Other establishment costs 649 1,241 3,501 1,896

Marketing expenses 240 442 ] 1,181 636

Administration and general expenses 413 655 2,850 863

Total 4,360 6,965 22,144 9,953

(g) Capital adequacy

(I) The capital adequacy ratios of the Group and of the Bank are as follows:

At 30 June 2017 %

CET1 capital ratio 88.953

Tier 1 capital ratio 88.953

Total capital ratio 88.953

At 31 December 2016 %

CET1 capital ratio 93.875

Tier 1 capital ratio 93.875

Total capital ratio 93.875

(II) The components of capital of the Group and of the Bank are as follows:

At 30 June 2017 RM'000

Tier 1 capital

Islamic banking capital fund 5,000

Retained earnings 187,474

CET1 capital/Tier 1 capital/Total capital 192,474

At 31 December 2016 RM'000

Tier 1 capital

Islamic banking capital fund 5,000

Retained earnings 168,552

CET1 capital/Tier 1 capital/Total capital 173,552


Group and

Bank

Group and

Bank

Group and

Bank

Group and

Bank

(15938-H)



33


(g) Capital adequacy (Cont'd)

(III) The breakdown of risk-weighted assets ("RWA") by exposures in each major risk category are as follows:

Group and Bank

30 June 2017


(i) Credit Risk



Banks, Development Financial Institutions ("DFIs")

and Multilateral Development Banks ("MDBs") 4 4 1 -

Other assets 495,370 495,370 132,554 10,604

Total on-balance sheet exposures 503,352 503,352 132,555 10,604

Total off-balance sheet exposures - - - -

Total on and off-balance sheet exposures 503,352 503,352 132,555 10,604

(ii) Market Risk

Foreign currency risk - - 3 -

Total - - 3 -


Total RWA and capital requirements 503,352 503,352 216,377 17,310

Group and Bank

31 December 2016


(i) Credit Risk



Banks, Development Financial Institutions ("DFIs")

and Multilateral Development Banks ("MDBs") 4 4 1 -

Other assets 447,191 447,191 124,000 9,920

Total on-balance sheet exposures 450,072 450,072 124,001 9,920

Total off-balance sheet exposures - - - -

Total on and off-balance sheet exposures 450,072 450,072 124,001 9,920

(ii) Market Risk

Foreign currency risk - - 3 -

Total - - 3 -


Total RWA and capital requirements 450,072 450,072 184,875 14,790

Gross Credit

exposures

Net Credit

exposures

Risk-weighted

assets

Capital

requirements

(15938-H)


Gross Credit

exposures

Net Credit

exposures

Capital

requirements

Risk-weighted

assets


34


(h)

(i)

(j)

(i)

(ii)

(iii)

(iv)

(v)

(vi)

(vii)

The Group and the Bank presently have five Shariah members.

To assist related parties on Shariah matters for advice upon request;

To advise on matters to be referred to the SAC;

To provide written Shariah opinion; and

To assist the SAC on reference for advice.

Allocation of income

To advise the Board on Shariah matters in its business operations;

To endorse Shariah Compliance Manual;

To endorse and validate relevant documentations;

Shariah committee

The operation of IBS is governed by Section 28 and 29 of Islamic Financial Services Act, 2013 ("IFSA"), which

stipulates that "a licensed institution shall at all times ensure that its aims and operations, business, affairs and

activities are in compliance with Shariah and in accordance with the advice or ruling of the Shariah Advisory Council

("SAC"), specify standards on Shariah matters in respect of the carrying on of its business, affair or activity" and

Section IV of BNM's "Guidelines on the Governance of Shariah Committee for The Islamic Financial Institutions" known

as the Shariah Governance Framework ("SGF") (which supersedes the BNM/GPS 1), which stipulates that "every

Islamic institution is required to establish a Shariah Committee".

Based on the above, the duties and responsibilities of the Group's and the Bank’s Shariah Committee are to advise on

the overall Islamic Banking Scheme operations of the Group's and the Bank’s business in order to ensure compliance

with the Shariah requirements.

The roles of the Shariah Committee in monitoring the Group's and the Bank's activities include:

The policy of allocation of income to the various types of deposits and investments is subject to "The Framework of

Rate of Return" issued by Bank Negara Malaysia in October 2001. The objective is to set the minimum standard and

terms of reference for the Islamic banking institution in calculating and deriving the rate of return for the depositors.


(15938-H)


Fair values of financial assets and liabilities

The estimated fair values of those on-balance sheet financial assets and financial liabilities as at the reporting date,

which are considered short-term in maturity, approximate their carrying amounts as shown in the statements of financial

position.

35

30. Fair value of financial instruments

Fair value hierarchy

(a) Level 1: Quoted prices

(b)

(c) Level 3: Valuation techniques for which significant inputs are not based on observable market data

Quoted Observable Unobservable

Market Price Inputs Inputs

(Level 1) (Level 2) (Level 3) Total


As at 30 June 2017

Financial assets measured at fair values:

Financial assets at fair value through 515,630 9,987 - 525,617

profit or loss 515,630 9,987 - 525,617

Derivative assets - 13,093 - 13,093

515,630 23,080 - 538,710

Financial liabilities measured at fair values:

Derivative liabilities 1,115 106,691 - 107,806

As at 31 December 2016

Financial assets measured at fair values:

Financial assets at fair value through

profit or loss 457,580 11,350 - 468,930

Derivative assets - 19,839 - 19,839

457,580 31,189 - 488,769

Financial liabilities measured at fair values:

Derivative liabilities 914 30,195 - 31,109

Valuation techniques using


(15938-H)


The Group and the Bank classify its financial instruments measured at fair value according to the following hierarchy,

reflecting the significance of the inputs in making the fair value measurements:

Refers to financial instruments which are regarded as quoted in an active market if quoted prices are readily and

regularly available from an exchange, and those prices which represent actual and regularly occurring market

transactions in an arm’s length basis. Such financial instruments include actively traded government securities,

listed derivatives and cash products traded on exchange.

Level 2: Valuation techniques for which all significant inputs are, or are based on, observable market data

Refers to inputs other than quoted prices included those within Level 1 that are observable for the asset or liability,

either directly (i.e. prices) or indirectly (i.e. derived from prices). Examples of Level 2 financial instruments include

over-the-counter ("OTC") derivatives, corporate and other government bonds and iliquid equities.

Refers to financial instruments where fair value is measured using significant unobservable market inputs. The

valuation technique is consistent with the Level 2. The chosen valuation technique incorporates the Group's and the

Bank's own assumptions and data. Examples of Level 3 instruments include corporate bonds in illiquid markets,

private equity investments and loans and advances priced primarily based on internal credit assessment.

The following table shows the Group's and the Bank's financial assets and liabilites that are measured at fair value

analysed by level within the fair value hierarchy as at 30 June 2017 and 31 December 2016.

36

30. Fair value of financial instruments (Cont'd)

Valuation techniques

Derivative financial instruments


The fair values of financial assets and financial investments are determined by reference to prices quoted by

independent data providers and independent broker quotations.

The fair values of the Group's and of the Bank's derivative financial instruments are derived using discounted cash flows

analysis, option pricing and benchmarking models.

The valuation techniques used for the financial and non-financial instruments that are not determined by reference to

quoted prices (Level 1), are described below:


(15938-H)


37

Documents

MAYBANK INVESTMENT BANK BERHAD (15938-H) CONDENSED ... · Appendix A 30 June 31 December 2017 2016 Group Notes RM'000 RM'000 ASSETS Cash and short-term funds 14 680,283 534,129 Deposits